Up-to-the-minute advice, information, resources, and, on occasion, commentary on federal and New Jersey state income taxes, and the various New Jersey property tax rebate programs, and insights and observations on tax policy and professional tax practice, by 40-year veteran tax professional Robert D Flach.

Thursday, June 25, 2009

IF YOU WILL INDULGE ME A LITTLE LONGER

I don't mean to do to the topic of regulating tax preparers what David Letterman does with a lame comedy bit - beat it to death. I promise that, with the possible exception of a final summary post, this will be my last commentary on the subject for a while.

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Opponents of regulating tax preparers continually mention the great "burden" that this will put on the honest and ethical preparer. I am at a loss to figure out what they mean.

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I am an honest and ethical "unenrolled" tax preparer. If I were required to be registered and licensed to continue to practice what would happen?

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(1) I would need to fill out an initial application form, which would certainly not be done during the tax filing season. How long could this take - an hour or two?

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(2) I would need to pay an initial registration fee of, say, $125.00 with the submission of my application form. Hardly a financial hardship.

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(3) While there could be an initial proficiency test, I expect that I would be exempt under some kind of "grandfather" clause which must be part of any licensure legislation, for practicality sake if nothing else.

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(4) I would be required to earn a minimum number of CPE credits during a period of time, which would probably average at least 24 hours per year. That comes to three 8 hour days of continuing education in a year. I already average more than that per year. No additional cost of time involved, at least for me.

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(5) I would have to reapply every 1, 2 or 3 years. I would have to fill out a form reporting my CPE hours earned for the period - one hour tops - and pay a renewal fee that would probably be no more than $50.00 per year. Big whoop!

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So where is the great "burden"?

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The newer or just starting out preparer who would be required to take an initial proficiency test would need to, perhaps, spend some time and money on a review course - 1 or 2 days and maybe $500.00 out of pocket. And then spend a day taking the test.

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And those who do not average 24 hours of CPE credits per year would have to spend a little more time and money. But, as I have said before, if a tax preparer is not spending at least 3 days a year on continuing education he/she should be, license or not.

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Still no great burden.

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And, besides, the cost of all this would be tax deductible as an ordinary and necessary business expense.

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So I ask those who oppose regulation - where is the great burden that would be placed on honest and ethical tax preparers?

8 comments:

If you're already doing the work that this regulation would entail, it's redundant to demand regulation (unless you're saying that you do all this work, which other tax preparers aren't required to do, and it makes no discernable difference to your customers).

Having a diverse set of business practices is good. Having some full-time professionals and some talented amateurs will make the business more flexible and dynamic.

I know prepares, good ones, who don't spend the money for CPE. A few are even more knowledgeable (informed) than I (in respects to cretin subjects) and I earn more than 30 credits a year through CPE courses.

They have a limited practice, with few clients. They will be financially burdened by the regulation should it require CPE. {And I think it should.}

Not to come to the defense of the fast-food chained (mostly because I hate them), but I see their prices going sky high trying to get all their preparers the required CPE is going to be a great expense to them as well. Of course, you are talking about the honest and ethical preparer/s.

I see where you are coming from but noticed that your thoughts all start with “I” except #3, but even that goes to “I”.

There are over a million tax preparers, you and I only make up two. even counting the ones we know, there are a far greater number of preparers we don’t know. What are they doing?

Then there is the family member who does everyone’s taxes for him or her. Plainly, they would need to be regulated too. Or the eldest child who preparers the parents return because of whatever reason.

All I am saying is there are many preparers who do well but don’t gain from preparing or gain so little. . . Would they not fall under what ever regulation required?

Personally I think this is a long and problematic issue with many factions and in some area somewhere this is going to cost people more money.

I think I’d like to go on a talk show and debate this with five or more “pros”. I am all for regulation but I can certainly see problems on both sides.

I do not see how any tax preparer can keep current without some kind of continuing education.

If you are saying that that the preparers who do not spend money for CPE keep up to date via "self-study" - there are many CPE opportunities that do not involve actually attending a class - including self-study courses. The additional cost would not be material.

I doubt that regulation will go all the way down to "Uncle Jim" who does his family's returns. As with proposed and existing requirements for electronic filing I expect there would be a nominal minimum number of required returns filed to fall under regulation. Individuals who prepare less than 25 tax returns annually, for example. And, of course, it would only apply to "professional" tax preparers - those who charge a fee.

One thought that no one mentioned previously is that the Treasury Department itself could become a provider of low-cost CPE.

Each year the Internal Revenue Service provides to the general public publications outlining the changes to the tax code. The Treasury could outsource the administration of an annual (or likely triennial) exam to Prometric, in the same fashion; they outsource the Enrolled Agent exam. The exam would be based on a one of the issued publications.

Before contacting me with questions about how a blog post relates to your specific situation, please be aware that I do not give free tax advice to non-clients by e-mail, comment response, or phone. So don't waste your time and mine.